The electricity subsector manages and develops one of the essential services for
the production, economic and social development of a country: the electricity
service.
This is the reason why it is so important to promote investments that allow keeping
in the short, medium and long term a safe, continuous, good quality and capacity
service to increase the national electricity coverage.
In Peru, investment opportunities are divided into the 03 activities of the electricity
business: generation, transmission and distribution.

In this business scenario, the Peruvian electricity subsector developed a regulatory
model that promotes competition and investment. This model is recognized at
a regional level not only because it is a modern scheme but also because it has
promptly evolved face to economic, social, environmental and climatologic challenges.
This document, prepared by the Electricity General Directorate of the Ministry of
Energy and Mines, aims at supplying the main data on the current situation and
prospects of the electricity subsector to promote investment in order to guide and
facilitate the search for further information.
It describes the promoting rules, the electricity market and infrastructure, the main
indicators, power resources, demand and supply prospects, the investment mechanisms and the list of projects in portfolio.
We expect that this effort contributes significantly to promote the development of
the Peruvian electricity subsector.

Investments must respect the guidelines of the
national energy policy. They must be efficient
as well as socially, environmentally and economically sustainable, following good energy
development practices, based on the use of new
technologies and renewable energy.
In this context, and in order to meet current
demand as well as future demand in the short
and long run, public and private investments
have been made in electric infrastructure at an
average rate of 29% a year. Their execution continues according to the particular conditions of
each project and the existing investment commitments. However, the challenge consists of
ensuring further investments to meet the electricity demand forecast for the medium and long
term.

Fuente / Source: MINEM, Estadística de Electricidad 2011

TW.h

During the last seven years, electricity has accounted
for, in average, 18% of final energy consumed in
Peru.
During the same period of time, annual electricity
demand grew 7% in average. This sustained growth
shows the good local macroeconomic conditions
–7% growth of the GDP–, in spite of the international
economic crisis.
The economic activities nationwide which require
high electricity consumption include mining, manufacturing and construction and residential users which
require mass electricity consumption.

1. To develop a diversified energy matrix focused on renewable sources
and energy efficiency.
2. To foster a competitive energy supply.
3. To provide universal access to energy supply.
4. To encourage higher efficiency in the productive chain and the use
of energy.
5. To develop a self-sufficient infrastructure for energy production.
6. To develop an energy sector with a minimum environmental impact
and low carbon emissions as part of sustainable development.
7. To develop a natural gas industry and its use in domestic activities,
transport, trade and industry, as well as an efficient electricity generation.
8. To strengthen institutionality in the energy sector.
9. To integrate the country into regional power markets to be able to
achieve the long run vision.

The electricity subsector has its own rules applicable to the electric
power activities in order to achieve these objectives, in addition to
other rules and policies that promote investments and international
cooperation. These laws were drafted and enhanced progressively so
that, together, may become a mechanism ensuring generation supply,
reinforcing electricity system, expanding electricity coverage, fostering
competition in the electricity market and a sustainable and varied use
of energy resources.

c. Regulatory Framework
Since 1992, the activities and businesses of the
electricity subsector are governed by the Electrical Concession Law Nº 25844, which was
improved and supplemented with other laws in
order to encourage investment and meet certain
aspects of the national energy policy.
The following table shows the main rules that
encourage investment in the electricity subsector, as well as the Peruvian technical standards
related to security in electricity operations and
ensuring quality of the electricity service to the
user.

Responsibilities of the Agents in the
Development of the Electricity Subsector
DGE
Electricity General Directorate
It grants the rights to carry out electricity related activities. They include the performance of studies and the
construction of electric infrastructure. Additionally, as
the case may be, it requires prior approval by DGAAE
in case of environmental impact assessments.
This responsibility to grant rights is shared with regional governments and is exercised according to the
criteria provided under the laws. It also promotes electric power projects, governs the central government
policies on the development of the electricity subsector, and proposes the electricity standards for the
Peruvian technical rules.
DGER
Rural Electrification General Directorate
It plans and promotes rural electrification works according to a plan in coordination with regional and
local governments, and specialized private and public
entities. In poverty and extreme poverty areas, these
works are subsidized by the State.
DGEE
Energy Efficiency General Directorate
It proposes the energy efficiency policy. It includes the
use of renewable and non renewable energies. Therefore, it is in charge of preparing the National Energy
Plan and updating the Energy Balance.
DGAAE
General Directorate of Energy-Related
Environmental Affairs
It evaluates and approves the environmental studies
of electric power projects according to the policies of
the Ministry of Environment (MINAM) and the national environmental standards in force.
OGGS
Social Management Office
It supplies the necessary support to keep a harmonious
relationship between companies and local population to
achieve a sustainable development of electricity projects.

PROINVERSION
Private Investment Promotion Agency
It promotes electricity projects and calls for tenders as
requested by MINEM.
Regional and Local Governments
Like the DGE, it grants electricity rights according
to its authority and encourages electricity projects
in their regions according to the national plans and
their own development plans.
COES
Committee for the Economic Operation
of the National Interconnected System
This technical organization coordinates the operation of the National Interconnected Electric System
(Sistema Eléctrico Interconectado Nacional - SEIN)
at a minimum cost, ensuring security of the system
and the best use of power resources. Also, it plans
the development of transmission in the SEIN and
manages the short-term market.
COES is made up by all stakeholders of the SEIN,
generators, transmission companies, distributors,
and free users.
OSINERGMIN
Supervisory Agency for Energy and Mining
Investment
It establishes the benchmark electricity rates based on
the rate policy set by the Electrical Concession Law
(LCE). It also supervises and fiscalizes the performance of electric concession agreements, and, in general,
electric power activities of companies.
To this respect, OSINERG regulates the necessary procedures to carry out its activities and applies sanctions
when necessary.
MINAM-OEFA
Agency of Environmental Evaluation and
Auditing - MINAM
It supervises and fiscalizes the effects of electricity related activities in environment according to the
environmental policy and national rules in force. Furthermore, it applies the relevant sanctions.

INDECOPI
Institute for the Defense of Competition
and Intellectual Property
It evaluates and approves the mergers and acquisitions among companies in order to safeguard
competition, considering the influence of economic
groups that participate in electric companies in the
country.
Ombudsman Office
It defends competition in the electricity market and
the rights of consumers. It gives its opinion and
recommendations regarding the protection of constitutional rights of people and the community to
ensure compliance with the duties of public administration and the supply of public services to citizens, in
this case, the electricity service.
Electric Companies
They include private and public companies engaged
in electricity generation, transmission and distribution.
As far as state-owned companies are concerned, the
National Fund of State Financing (Fondo Nacional de
Financiamiento del Estado - FONAFE) is the institution
that gathers public institutions in order to conduct
and govern the state business activity. It also includes
ADINELSA, the state-owned company that manages
rural electrification infrastructure subsidized by the
State.
Final Customers
They include the direct consumers requiring electricity
for residence use or to carry out industrial and economic activities.
Large consumers have the option to be free customers (freely negotiated price). The National Society of
Industries (Sociedad Nacional de Industrias - SNI) is the
non-for-profit institution that gathers the most representative industrial companies in the country.

e. Guarantees for Investment
and Taxation
Guarantees for Investment
Foreign investors and their companies have
the same rights and responsibilities than local
investors and companies without further exceptions than those stipulated in the Peruvian
Constitution and Legislative Decree Nº 662.
National rules do not discriminate at all foreign
investors and companies.
Local and foreign investors have the same rights
regarding properties acquired in the national
territory. However, the Political Constitution, in
its article 71º, stipulates that foreign investors
may not purchase, directly or indirectly, or have
any title whatsoever on, mines, lands forests,
water, fuels, energy sources within a span of
50 km next to the borderlines. Any particular
exception must be authorized through Supreme
Decree approved by the Board of Ministers.
In relation to foreign investments, the national
laws provide that they must be authorized automatically and that, once they are made, they
must be registered in the Private Investment
Promotion Agency (PROINVERSIÓN), with statistical purposes mainly.
Foreign investors also enjoy the right to transfer overseas in foreign currency the funds listed
below, without any exchange restriction or
prior authorization by any Central Government
authority or decentralized public organization,
regional or municipal governments, upon payment of the applicable legal taxes:
• All earnings from investments.
• A ll dividends or profits from their investments.

Juridical Stability Agreements
Juridical Stability Agreements grant certain
guarantees to foreign and local investors
intending to carry out economic activities related to any sector in order to provide for a
stability framework.
These agreements are entered into by
the Private Investment Promotion Agency
(PROINVERSIÓN), and/or the ministry of the
relevant sector, on behalf of the Peruvian
State.
Juridical Stability Agreements may be entered
into before or within the twelve months following the authorization. These agreements
guarantee to the holders of the concessions
that the specific schemes and rights granted
will not be amended for 10 years as from
their execution.
In case of the agreements entered into under
the Rules governing Private Concessions in
Infrastructure Public Works and Public Services, approved by D.S. Nº 059-96-PCM, their
validity will extend throughout the term of
the concession.
Local and foreign investors as well as the
companies receiving their investment may be
subject to that juridical stability scheme provided that they undertake -as minimum and
in a term not longer than 2 years as from the
date of execution of the agreement or the
date of authorization- to do the following:

Income Tax
Peruvian Income Tax is levied on the earnings
(profits or benefits) obtained by tax payers
which are residents in the country without
considering the nationality of individuals, the
place of incorporation of companies, or the
location of the income source.
Additionally, the Income Tax is applicable to
those persons that qualify as non resident
tax payers in the country, but only in relation
to the earnings from a “Peruvian source”.
This tax is settled and paid on a yearly basis,
even though there is an obligation to make
monthly advance payments.
In order to determine the Income Tax to be
paid and the economic effect on foreign
investments, it is essential to take into consideration the agreements entered into by Peru
to prevent double taxation.
Furthermore, it is important to mention Legislative Decree Nº1058, which provides for
an Accelerated Depreciation Scheme for investments in electricity generation using
renewable sources. It is applicable to power
plants starting their business operation on
June 29, 2008. This accelerated depreciation
is applicable to machineries, equipment and
civil works necessary for the installation and
operation of power plants acquired or built as
from the effective date of the rule.
Value-Added Tax (IGV)

• M oney contributions through the National
Financial System to the capital stock of a
company incorporated or to be incorporated.
• R isk investments with third parties for an
amount not lower than US$ 5 million (Law
Nº 27342).

The Value-Added Tax (IGV) is a tax on consumption paid monthly levied on the value
added in each transaction performed in the
different stages of economic activities, using
a debit and credit scheme.

21
Ministerio de Energía y Minas / Ministry of Energy and Mines

www.minem.gob.pe

This tax is applied as follows:
The tax payable is determined monthly by deducting the Gross Tax resulting from applying
the tax rate on the taxable basis the Tax
Credit; in other words, the IGV paid for all
purchases of goods and services made so
that only the difference between these 02
amounts is the sum payable to the tax authority.
There is a special regime for early IGV recovery, as provided for under Legislative Decree
Nยบ 973.
For more information, visit:
www.mef.gob.pe
www.sunat.gob.pe
* The taxable basis in made up of:
a) Sale of goods: sale value.
b) Supply or use of services: Total compensation.
c) Construction agreements: Construction value.
d) Sale of real estates: Earnings.
e) Imports: Value in customs plus the relevant duties and taxes.

Generation plants throughout the national territory produce electricity by transforming a source
of thermal, chemical, mechanical, light or other
energy.
Their location depends on the type of technology
and technical and economic aspects because they
have to be located near the source or point of
supply of energy resources.
Generation companies operate this type of infrastructure and optionally, use small transmission
systems to transport electricity to the large transmission systems, similar to large or main roads.

The distribution systems allow transporting
electricity from transmission system to final users.
Distribution companies have a more focused territory, in other words, they operate at a city, district or
town level, and optionally, they may operate small
transmission systems in order to connect to large
transmission systems and bring electricity towards
their distribution systems.
In Peru, the electricity system operates at a 60 Hz
nominal frequency.

Large transmission systems transport the energy
generated through 500, 220 and 138 kV transmission lines to the distribution systems. Transmission
companies have a wide coverage that may include
several regions or countries.

Today, the electricity market has 57 major
electric companies, including both private and
state, out of which 27 are engaged in generation, 07 in transmission, and 24 in distribution.
Likewise, there are self-generation industries
that operate power generation plants to supply
totally or partially the electricity demand of their
own industrial activities.
The following table shows a list of the major
electric companies and the indicators that show
their extension or size.

The electricity market has a generation park made up by 45 power
plants with a capacity higher than
18 MW, which, in the aggregate,
account for an installed capacity of
6 963 MW.
This group includes 23 hydropower
plants that total 3 152 MW, and 28
thermal power plants that total 3 811
MW. Nine out of the thermal power
plants operate with natural gas and
reach 2 658 MW.

d. Transmission Infrastructure
The electricity market has an interconnected
transmission system called National Interconnected Electric System (Sistema Eléctrico
Interconectado Nacional - SEIN) that covers large
areas of the national territory with high voltage
networks at nominal voltages of 60, 138, 220 y
500 kV.
For SEIN, the 500 kV voltage level is new and it
will be expanded in the short and medium term.
Furthermore, there are isolated systems of different sizes, mostly with nominal voltages applied
to distribution systems.

e. Distribution Infrastructure
The electricity market has electricity distribution
systems in the concession areas granted to distribution
companies, as shown in the map below.
The distribution companies implement their
distribution electric systems within the area granted.
Most of the large distribution systems are connected
to the SEIN; the smallest ones operate in an isolate
manner and are called Isolated Distribution Systems.
The distribution networks operate at medium
voltage at 22,9 and 10 kV, and at low voltage at
0,4, 0,38 and 0,22 kV. Low voltage is usually the
supply voltage applied to residential areas.

1.
1 Energy and power transactions between generators at spot price.
2.
2 Intermediate sale of electricity from generators to
distributors at free rates. There are also several cases
of intermediate electricity sale between generators,
at free rates.
3.
3 Final sale of electricity from distributors to free
final customers at free rates.
4 Intermediate sale of electricity from generators to
4.
distributors at regulated rates.

5.
5 Final sale of electricity from distributors to final regulated customers at a regulated rate.
6 Intermediate sale of electricity from generators
6.
to distributors at a price set in an auction. The
purpose of the auction is to obtain energy and
power contracts to supply final regulated customers.

In the electricity business, generation and distribution companies as well as final users are
the stakeholders that actively participate in the
market. According to the alternatives to select
or negotiate the electricity rates, the electricity
market may be classified into:

Spot Market
Electricity rates, by default or upon agreement, are equivalent to marginal cost values,
which vary every 15 minutes as a result of the
economic dispatch operation of the National Interconnected Electric System (SEIN).

Free Market
The parties agree upon the supply prices and
conditions; they are freely negotiated.
Regulated Market
The parties agree to accept the rates set by the
regulatory body OSINERGMIN, as well as the
supply conditions set forth in the applicable
rule.
Auction Market
The purchase and sale prices for electricity are
set through auctions.

3. Main indicators
a. Energy Sector and Electricity
The energy path in the country during 2004-2010
-see Graphic Nº 1- shows a clear trend from 2004
to 2007, with a significant increase of production by unit of final energy consumed (energy
economic efficiency: GDP/energy), and also in the
GDP per capita.
During 2008 and 2009, the first indicator went
down but the second one continued stable, while
in 2010, the trend experienced during 2004-2007
came back.
Graphic Nº2 shows that the annual growth rate of
final energy consumption decreased to 4%, after
keeping almost constant levels at 5% until 2008.

In relation to energy consumption by type of
resource, Graphic Nº 3 shows a higher share of hydrocarbons (59%), followed by the group of energy
resources firewood, manure and yareta (18%), and
electricity (17%).
In relation to the sectors that consume more
energy, transport ranks first (39%), followed by
the group of residence, trade and public service
activities, (31%), and the group of industry and
mining (25%), as shown in Graphic Nº 4.
Recently, the share of electricity in that matrix
kept almost constant at an average of 18%.

According to the figures in 2011, Peru is a country with 29,5 million inhabitants
which anthropogenic activities require electricity at 36 TW.h. This accounts for
17.7% of the total final energy demand. As a result, electricity consumption per
capita was 1 079 kW.h-inhabitant.
Likewise, the electricity demand was supplied by a total electricity production of
36 TW.h, 56% from hydroelectric power plants and 44% from thermal power
plants. At the end, the demand and production ratio in the electricity subsector
resulted in an efficiency of 88.4%.
Table Nº 1 shows the main indicators of the national electricity subsector.
Regarding the generation park, the available installed capacity reached 9 GW
and it is made up by hydroelectric power plants (40%) and thermal power
plants (60%). Out of the aggregate, 85% produces energy for the electricity
market, and the remaining 15% is made up by the group of power plants that
belong to self producing companies (generate for their own use).
By the end of 2011, the effective capacity of the domestic generation park was
8 GW, 42% from hydropower plants, and 58% from thermal power plants.
As far as the transmission system is concerned, the total network length in 500,
220 and 138 kV was 11,382 km.
Electricity production by type of source is broken down into 59% from hydropower, 34% from natural gas, 4% from diesel and residual and 3% coal, as
shown in Graphic Nº 6.

The electricity market is the business space where
electricity generation, transmission and distribution
companies develop their activities and interact to
supply electricity to final customers.
At the end of 2011, the number of final customers or
supplies amounted to 5,5 millions, which consumed a
total of 32 TW.h electrical energy, which is equivalent
to a billing of US $2780 millions. As a result, the mean
electricity price was 9 cents US$/kW.h, as shown in
Table Nº 2.
This demand corresponds to the customers supplied
through the National Interconnected Electric System
(SEIN) and isolated systems.
In order to meet that demand, the generation
plants operating for the electricity market produced
a total of 36 TW.h of electrical energy, 58% from
hydropower plants, and 42% from thermal power
plants. By the end of 2011, the effective capacity of
this generation park was 7 GW.
The SEIN covers almost all electricity market demand
because it has a larger number of users and a higher
value of demand by user, while the isolated system
supplies towns and small villages.
Furthermore, the generation park connected to
SEIN has the larger power plants nationwide. This is
the reason why, together with other technical and
economic reasons, the COES select among these
plants the ones that will operate and dispatch on a
coordinated manner under its approval.
By the end of 2011, the COES-SEIN generation park
reached an effective capacity of 6 GW and recorded
a maximum demand of 5 GW (measured at the
generator terminals), on December 14 at 20:15
hours.
As a result, the reserve margin in general in COESSEIN and SEIN was 31%.

d. Evolution of the Electricity Subsector
Indicators
Electrical Energy and Number of Customers
In terms of electrical energy, from 2004 to
2011 (Graphic Nº 7), the production of electrical energy in this market nationwide grew at an
average rate of 6,9%, with an average increase
of 2,1 TW.h/year.
Among the energy sources used to produce
energy, hydropower is the most outstanding. Its
evolution during 2004-2011 shows a reduction
in 2004 from 76% to 58% in 2011, as shown in
Graphic Nº 8. In consequence, hydropower production had a mean growth rate of 2%.
The natural gas scenario showed opposite results.
Its share reached 37% in 2011, with an average
growth rate of 32% during the same period of
analysis.
Like hydropower, other energy sources such as
diesel and residual decreased their shares mainly
caused by the larger use of natural gas for electricity generation.
Graphic Nº 9 shows that the final sale of energy
in the electricity market increased at an average
rate of 7%, at an average pace of 1,74 TW.h/
year.
In that final sale, free customers had a higher
growth at an average rate of 6% and their
average share in the final sale was 44%, while in
case of regulated customers, the average growth
rate was 8% and their average share was 46%.
Regarding the number of final customers or
supplies, there was an average increase of 5%
and 234 thousand customers/year.

Regarding effective power in relation to the electricity offer during 2004-2011, it grew nationwide
at an average rate of 6% and an average increase
of 307 MW /year.
Graphic Nº 11 shows that the higher cumulative
increase of supply occurred in 2009 with 907 MW,
and then in 2010 with an additional 744 MW.
In the electricity market, during the same period of
time, the effective power grew at an average rate
of 6% and an average increase of 272 MW /year.
At the level of COES-SEIN, the average increase of
effective power was 247 MW/year, at an average
rate of 5%.
This supply allowed covering the maximum demand
of SEIN and obtaining a reserve margin of up to 30%
in 2011, as shown in Graphic Nº 11.
Furthermore, it is important to mention that year
2008 was an atypical year as far as growth of the
national demand is concerned because of the
impact of economic crisis. However, the average
growth rate of the maximum demand of SEIN was
7%, higher than the effective power rate (6%).
Considering this atypical year, the average increase
of the maximum demand is 229 MW/year. Graphic
Nº 12 shows the evolution of the annual increase
of COES demand.

During 2004-2011, the total cumulative investment executed amounted to US $7,113 millions,
out of which 87% was made by private companies and 6% by state companies. The remaining
7% corresponds to the investment by the State
in rural electrification. It is to note that in each
of the last 7 years, the share of private companies in the total annual investments exceeded
60% while state company investment was below
23%.
Regarding 2010, the share of private companies
in total investment was 72% and of state companies was 16%.
In relation to private investments during the
last two years (2010 and 2011), the annual investment amounts executed by transmission
companies exceeded the one made by distribution companies. In case of state companies, the
largest amounts of annual investments were
executed by distribution companies.
Gráfico Nº14: Inversión ejecutada en el
Subsector Eléctrico 2004-2011
Graphic Nº14: Investment executed in the
Electricity Subsector 2004-2011
Millones US$
Millions US$

4. Energy resources
Peru has a complex geography characterized by
the presence of the Andes mountain range and
the Pacific currents, which, among others, explains
its variety of climates and widely varied landscapes
such as the dessert coast, the Andes highlands or the
Amazon forest.
As a result, Peru is one of the countries with more
biodiversity around the world and a large variety of
mineral resources, in addition to the variety of renewable energy resources throughout its territory.
a. Hydropower
According to a preliminary study of the National
Hydropower Potential, called HIDROGIS, the usable
technical potential with run-of-the-river hydropower plants amounts to 69 445 MW, being the
higher use in the Atlantic basin with 60 627 MW,
followed by the Pacific basin with 8 731 MW.
These figures do not include restricted areas and
areas with final concession of hydropower plants
operating. But, it considers those areas that have a
larger technical and economic possibility to develop
hydropower projects.
Another study in the seventies, prepared with the
assistance of the German technical cooperation,
and called Evaluation of the National Hydropower
Potential (EPHN), established that the technically usable potential was around 60 000 MW, and
involved a list of 328 projects.

The largest potential of wind energy is in the
Peruvian coast due to the high influence of the
Pacific anticyclone and the Andes Mountain
Range, that together cause winds from the
Southwest in all coastal region.
During 2008, a Peruvian Wind Atlas was
prepared which contains the average wind intensity records in the national territory and is an
important benchmark for the study of small- and
large-scale wind projects.
The same document estimates that the wind potential would exceed 77 000 MW and that over
22 000 MW may be used. However, these calculations are preliminary estimates and require
more detailed studies.
Other studies show that only the Peruvian coast
has a wind potential of 57 000 MW.

Peru has solar radiation levels that make it feasible to
implement solar parks for the production of electricity
both for the National Interconnected Electric System
(SEIN) and for the isolated systems located mainly in
rural areas, including other applications different from
electricity.
The technical and economic feasibility of solar projects
depends on investment opportunities, using competitive advantages offered by Peruvian rules for
renewable energies, as well as the technological
progress and the decreasing evolution of costs in infrastructure.
Even though the potential has not been estimated
in terms of solar projects for electricity generation, a
Solar Atlas was prepared which contains the records
of average solar radiation for each month of the year.
This is an important guide for those interested in the
development of solar projects.

In December 2009, the technical cooperation
between the Japan International Cooperation
Agency (JBIC) and MINEM started for the preparation of a Master Plan for Geothermal Energy
Development in Peru.
The preliminary studies estimated a potential of
3 000 MW nationwide.
Furthermore, there are feasibility studies on
02 projects with an aggregate of 200 MW
minimum, both are located in the Region V of
the Southern Volcanic Chain, Region of Tacna, in
the geothermal fields of Borateras (50 MW) and
Calientes (150 MW), respectively.
Now, the companies that were granted rights or
authorizations for the exploration of the geothermal resource are preparing additional studies.

As of today, no studies have been prepared
to identify the biomass potential in terms of
capacity of electricity generation projects.
It is estimated that with current agroindustrial wastes, up to 177 MW may be obtained
in conventional biomass plants and 51 MW
using biogas. This estimate is based on the production records of year 2009 of agroindustrial
wastes in sugarcane processing plants, rice skin,
cotton, wheat, asparagus and forest wastes from
sawmills.

f. Hidrocarburos

In Peru, there are 18 sedimentary bases with
possibility of production of hydrocarbon where
oil and gas exploration and development activities are being carried out. Furthermore, there are
hydrocarbon processing and storage plants in
several areas of the country.
In relation to the pipeline hydrocarbon transportation system, Peru has the Northern Oil Pipeline
and the Camisea Gas Transportation System.

The prospect of the electricity sector contributes to
guarantee the energy supply and the feasibility of
the sector in the long term, in addition to ensuring
its responsible conduction and promoting the
development of industry and mining in Peru.
Now, local and foreign investment is strengthening
the infrastructure of the National Interconnected
Electric System (SEIN). Accordingly, the plans include
an expansion of the Transmission System and the
construction of more hydropower and thermal plants,
including solar, wind, biomass and biogas plants,
among others.

These scenarios show, from top to bottom, the
probability of occurrence of future demands that
depend significantly on the international and
domestic situation as well as on the investment
decisions of large electricity consumers (mining,
manufacturing, etc.), and of small but mass final
electricity users. They are made up by families
and households that aim at having a comfort
level by purchasing electricity equipment based
on their purchasing power.

a. Demand Forecast

In an optimistic scenario, it is estimated that from
2011 to 2030, the total increase of the power
demand in the SEIN would be 17 598 MW, additional
to the current demand of 4 961 MW, recorded in
December 2011. In other words, it would increase
almost 04 times its current value.
In the same scenario, it is estimated that during the
first 05 years (2011-2015), the SEIN demand will
be increased an average of 857 MW/year with an
average growth of 13%.

The electricity demand forecast shown below is
a preliminary estimate of the energy and power
requirements in the country. This analysis is made for the
National Interconnected Electric System (SEIN) nationwide,
including the small isolated electricity systems, while they
are technically and economically feasible.
In general, the SEIN electricity demand will continue
increasing pro rata the needs of the population and its
several economic activities.

Power Demand

In relation to the following 03 five-year periods
and up to 2030, the average annual growths could
be lower, 8%, 6% and 6%, respectively. However,
there would be higher average increases (808, 847
and 1 154 MW/year).
In general, the higher demand corresponds to
the so called vegetative loads, in other words, the
consumptions related to the growth of population
and the GDP (households, trades and medium size
industries). Additionally, the loads required by large
projects, mainly possible new mining projects, different
from the above mentioned load, have a rather
subjective occurrence, and are analyzed independently.
Finally, it includes additional loads such as small
systems isolated from SEIN, some special loads and
“other loads”, which refer to the loads typical of the
system operation such as electricity loads and the own
consumption of electricity generation plants.
Regarding large projects, in an optimistic scenario,
the total increase of these loads from 2011 to
2030 would be 3 761 MW, where the higher
demands would belong to projects such as:
Toromocho (220 MW), Hierro Apurímac Nº 2 (180
MW), Los Calatos (180 MW) y Opabán (180 MW),
among others.
In case of other scenarios, it is estimated that the
probable future situation of the projects, i.e., a delay
in the commissioning, decreases the size of the load
or it is not considered.

In energy units, and in an optimistic scenario, it
is estimated that from 2011 to 2030, the total
energy demand increase of the SEIN would
be 119 TW.h additional to the current annual
demand of 32.6 TW.h recorded in 2011. In
other words, the demand would increase
almost 04 times as compared to the current
value.
In the same list of projects and scenarios, it is
estimated that in 05 years (2011-2015), the
energy demand of SEIN would be increased
by an average of 5,8 TW.h/year at an average
growth of 12%.
During the following five-year periods, from
2016 to 2030, the average growths may reach
8%, 6% and 6%, while the average increase
would be 5,6, 5,7 and 7,8 TW.h/year, respectively.

b. Generation Supply Prospects
In an intermediate scenario, the aggregate of
projects forecast for 2011 to 2015 will mean
for SEIN an average increase of 869 MW/year.
This supply is made up by large hydropower
and thermal power plants of natural gas and
renewable energy based plants, such as hydropower plants lower than 20 MW, wind and solar
parks, and biomass power plants.
In the following three five-year periods of time,
from 2016 to 2030, the increases may be 645,
850 and 875 MW/year, respectively, considering keeping an average reserve margin of 41%
(benchmark value only for this evaluation and
computed based on the demand forecast of
an intermediate scenario). In other words, it is
estimated that in an intermediate scenario, the
total increase of the generation supply required
by the country from 2011 to 2030 would be 17
148 MW.

Regarding the projects forecast until year 2016,
they total 5 079 MW. Based on their power, the
most outstanding are: C.H. Chaglla (406 MW),
Cerro El Águila (402 MW), C.T. Fénix (520 MW),
the cold reserve plants with a total of 800 MW
and the group of wind, solar and biomass projects
which total 348 MW.
Furthermore, other projects and technologies are
being evaluated, taking into consideration that
they must start operating as from year 2019. Up
to 2030, the expected additional supply would be
10 810 MW to keep a reserve margin of 35%.
This reserve margin involves having stand-by
power plants, ready-to-use promptly, in order to
meet the scheduled or not scheduled non availability in other power plants, and also in some
cases to meet any unexpected large demand increases.
Other of the reasons for a reserve margin is the
natural or unexpected reduction of electricity
production from wind and solar plants, consi-

dering that this type of plants operate on a non
continuous basis due to their dependence on
wind availability and intensive solar radiation at
daytime. The same situation, although with less
variability, applies to hydropower plants which
do not use dams or ponds, and where electricity production directly depends on the flood or
draught seasons of river flows.
For other scenarios, the year for the start-up of
the projects planned may be longer depending
on the unexpected effects affecting the investments committed.
Some of the projects are in the study phase
and depend on the investment decisions of the
business sector.
According to the policy for the promotion of renewable energies, the objective is that renewable
energies account for 5%, without considering
RER hydropower plants, of the national energy
demand. The MINEM may increase or keep that
share every 05 years.

c. Transmission Forecast
Reinforcement and expansion demand
The increase of demand and the electrical supply
requires a reinforcement of the transmission system
to allow for a higher electricity flow.
This strengthening consists of increasing the
number of lines on the existing transmission lines,
if they are ready for that, or, otherwise, build more
transmission towers with parallel or alternate routes
to the existing ones.
A relatively economic form to expand the transport capacity is to use higher voltage levels, and for
that, larger electrical towers are required. This is the
reason why, and because large demand and supply
increases are expected in the country, 500 kV transmission networks are being built, in order to expand
them nationwide and consolidate them as an alternative for large electricity blocks in all the SEIN route.
This will allow using the energy produced by large
national generation projects and even the electrical
supply of other countries through international interconnection.
The following level of voltage, and the most important one, is 220 kV, which existing routes will
be reinforced in the short term, and in the medium
term they will be expanded to isolated electrical
systems.
Today, the SEIN shows in sequence the form how
the technical and economic problems were solved

to expand the network and match the demand
(users) with the supply (generation), first on the
coast, and then on the Andes with its particular
geographic characteristics, with the challenge of expanding the network towards the Amazon Eastern
side of the country, without forgetting the previous
political, environmental and social considerations.
Transmission plan
The strengthening of the transmission system
nationwide is developed satisfactorily within
the framework of the electricity subsector that
provided for the preparation of a Transmission
Plan to be proposed by the Committee for the
Economic Operation of the National Interconnected System (COES) and to be approved
by the MINEM and with the opinion of the
Supervisory Agency for Energy and Mining Investment (OSINERGMIN).
The laws also set forth that until developing
and publishing the first Transmission Plan, it
will be developed according to the Temporary
Transmission Plan.
Chapter 08 of the document shows the transmission projects executed according to the
Temporary Plan, as well as the main projects
proposed in the updating of the Transmission
Plan 2013-2022, published in April 2012.

International interconnection
Interconnections with other countries aim at increasing security and reliability of the transmission
system supply, and creating business or market
opportunities for the companies involved in the
system, which may result in the development
of large generation projects being economically
feasible.
The study “Proposed Updating of the Transmission
Plan 2013-2022” explains major aspects related to
the development of international interconnections
of Peru with its neighbors in the medium and long
term.
Until 2022, it is estimated that the National Interconnected Electric System -SEIN- will have a 500kV
transmission system to ensure transport of the
energy generated by future generation plants and

an electricity exchange capacity according to binational or regional agreements.
This study indicates that the international interconnection projects are usually developed with specific
purposes such as market integration, electricity
exports or imports from preset power plants, a joint
use of hydropower features including the management of seasonal or multiannual water regulation
capacities.
Significant progress has been achieved on the
agreements made with the Andean Community
(Comunidad Andina de Naciones-CAN) and some
neighboring countries as detailed below:
• Andean Community Regional Agreement: Agreement for Regional Interconnection of Electrical
Systems and International Exchange of Electrical
Energy based on Decision 757 dated August 2011.

• Peru-Brazil Binational Agreement for Energy Integration entered into in May 2008.
• Peru-Brazil Binational Agreement entered into in
June 2010.
Peru’s favorable geographic location in the Region
allows for creating business opportunities such
as encouraging energy exports and imports with
neighboring countries. At present, there is an interconnection with Ecuador and progress has been
achieved as well in the negotiations with Brazil. The
current situation and the future opportunities are
described below:
• Peru - Ecuador Interconnection: Now, the country
is interconnected with Ecuador through the
Zorritos- Machala 220 kV transmission line. There

is a restricted capacity link (160 MW load transfer
at 220 kV) and it is used for extraordinary emergency supplies between these two countries.
When the construction of the transmission lines
is completed, the Extra High Voltage Interconnection will be optimized to facilitate the hydrologic
exchange of Peru and Ecuador in the medium
and long term.
• Peru - Brazil Interconnection: The Proposed
Updating of the Transmission Plan (PPT) includes
a connection scheme for the projects set forth in
the Binational Agreement that provides for supply
to SEIN and exports to Brazil.
• Peru - Colombia Interconnection: The geographic scope of the Peruvian and Colombian
national interconnected systems are rather far
from the borderlines. However, it is still possible
in the near future to have a physical interconnection link between these two countries, indirectly,
through Ecuador. In the long run, a Peru-EcuadorColombia electrical integration may become a
reality.

• Peru - Bolivia Interconnection: In the future,
both Peru and Bolivia could export energy surpluses: Bolivia, with a low-cost natural gas thermal
power supply, and Peru, with a strong hydropower resource.
• Peru - Chile Interconnection: It is expected to
implement in the medium term the binding plan
of the Proposed Transmission Plan in Southern
Peru. It will have a 500 kV transmission system in
spots near the borderline (Montalvo, Moquegua).
This strengthening would be essential if the future
supply for the Southern area includes natural gas
thermal power and hydropower projects.
Interconnection decisions are the result of political
agreements and technical and economic analysis on
the impacts, electricity price variation and supplementary energy resources, among other important
aspects that allow knowing the cost-benefit of investment.

The electricity oriented rules underscore the importance of promoting
competition in the electricity sector. To this respect, the regulatory
model provides that in order to participate in the electricity business,
a company must carry out only one of the electricity related activities:
generation, transmission or distribution. However, companies operating
isolated systems are exempted from this rule provided that they keep
separate accounting.
Furthermore, mergers and acquisitions between companies will be
previously evaluated and approved by INDECOPI, in order to protect
competition from the influence of economic groups which have a share
in the different electric companies in the country.

Generation
Generation business is developed on a competition basis and new investments start upon
initiative by investors or the state. If promoted
by the State, tenders or biddings are called for
projects of national interests designed based
on the development plans of the electricity
sector.
Electricity, as a result of the transaction, may
be generated using several renewable and non
renewable generation technologies, taking
into consideration that the National Interconnected Electric System (SEIN), operated by the
Committee for the Economic Operation of the
National Interconnected System (COES). From
a commercial standpoint, this Committee only
considers the electricity generated by the most
efficient and economic plants, in other words,
by the ones which dispatch electricity ranked
based on the lowest to the highest variable
electricity cost -marginal cost-, as well as speed
and availability to meet the demand. The companies dispatching first will also include those
companies which enjoy any privilege under the
law such as the renewable energy plants.
Hence, a company may diversify its options
for dispatch if it acquires different generation
technologies that may supplement each other
in terms of variability of use of availability of
energy resources (hydropower, winds, solar radiation and natural gas, among others) and the
dispatch preference.
Now, power plants with renewable energies
have preference for the dispatch, and
premiums are applied -a subsidy benefit- to
cover the total cost of electrical energy production (volume and price committed as the
result of auctions) in the item that may not be
covered by the spot market. The spot market
only offers economic earnings at spot price or
marginal cost resulting from the system.

Furthermore, the benefits to renewable energies
are applied to the supply of projects that are
awarded contracts through RER (Renewable
Energy Resources) auctions. This benefit has a
limit represented by the 5% objective of the
national electrical energy demand.
Regarding the electricity market, in addition to
the spot market, there are other markets such
as the free market, the regulated market and
the supply auction market. The combination
of these markets may allow decreasing the
business risk and have a relatively less variable
and predictable cash flow in relation to the sale
of electricity and production costs. Chapter 2
of this document contains a brief description
of these markets.
Other mechanisms for the promotion and incentive of power generation plants include the
tax benefits offered to large renewable energy
and hydropower plant projects, as explained in
Chapter 1. Moreover, the State may promote
electricity supply auctions in the medium and
long term in order to ensure investments of
said projects.

Transmission
The electricity transmission system is mainly
developed as part of a regulated scheme
because it is a natural monopoly.
According to the regulatory reform of the
electricity sector, the State defines the transmission projects based on a Transmission
Plan and then calls for tenders or auctions
to implement them. This scheme has been
applied with a Temporary Transmission Plan,
and now with the recent publication of the
First Transmission Plan (April 2011), it is
expected to continue executing the reinforcement and expansion plans for the short
and medium term.
The plan includes those projects that will
become part of the Transmission Guaranteed
System, which means that they will have a
guaranteed return on investment regarding
the amount awarded in the auction with
fixed income in a period of 30 years.
The basic criteria of a guaranteed system are
based on the main networks that benefit all
users of the SEIN. The economic resources to
make the annual payment of this system will
come from all final customers as an additional billing item.
Optionally, the plan will include the projects
of the Supplementary Transmission System,
where the return on investment is sourced
from the beneficiaries of the system only. It
also ensures the return on investment with
fixed earnings within a period of 30 years.
In both cases, tolls are paid, and their values
are regulated by the Supervisory Agency for
Energy and Mining Investment
(OSINERGMIN).
The projects that are not included in the
Transmission Plan may be developed by own
initiative of investors which require new
transmission networks for purposes consistent with their line of business or because
they foresee an opportunity to earn from the
tolls collected and choose to undertake the

business risk. When these projects are completed, they will be called Supplementary
System.
In brief, as from the reform, the Transmission System will be developed in 02 types of
systems qualified as: Guaranteed Transmission System and Supplementary Transmission
System.
Likewise, the network contract and qualification conditions existing before the reform
will be kept, such as the Main System and
the Secondary System.

Rural electrification is a State subsidy program
for those projects that intend to build small
distribution systems and bring electricity to those rural areas where distribution
companies do not have a final concession.
Additionally, those projects are not economically feasible in a normal investment
context. The facilities built are then transferred to state or private companies interested
in operating and providing maintenance and
expanding their business territory.

Distribution
The electricity distribution business is developed as part of a regulated scheme because it
is a natural monopoly.
If a company is benefited with a final distribution concession, it means that it is receiving
a geographic area under concession where
it has the obligation to supply electricity to
those requiring it in that area, in accordance with the rules applicable to ownership of a
real estate.
But, in the areas where there are no concessions or areas granted, any investor or
company may develop and expand an electricity distribution system.
Regarding the electricity rates, the electricity subsector rules grant to OSINERGMIN the
authority to determine the benchmark bar
rates of the system –to purchase and sell electricity in batches -, the electricity rates for
regulated final customers –for electricity sale
– and the tolls for the distribution system.
There are also free final customers –with a
larger consumption – with whom they have
the chance to negotiate the volume and rates
of the electricity service.
There are also other markets that allow distribution companies to diversify the amount and
frequency of their expenditures in purchases
of electricity and earnings from the sale of
electricity.

b. Granting of Electricity-Related Rights
The electricity-related rights granted by the
State for the development of electrical energy
activities are concessions, authorizations and
easements.
Temporary concession
They are granted to carry out feasibility studies in order that a company has the
authorization to use properties of public use
and the right to obtain easements for performing those studies. The maximum term for
this concession is 2 years, with the possibility
of expanding it for one year in case of force
majeure, related to non performance against
expiration of the concession (non completion of study) and the execution of a letter of
guaranty. This concession is applicable to:
1. Generation plants with an installed power
equal to or higher than 750 MW and/or in
case they require easements on properties
owned by thirds.
2. Substations or transmission lines.
Reference rules: article 23° of the Electrical
Concession Law (LCE, Decree Law Nº 25 844),
article 30° of its regulations and article 8º of
Law 16053.
Final Concession
It is granted for the implementation of electrical projects and the development of related
electricity related activities. It is granted for an
indefinite term.
In case of projects, the request for permit
includes a binding schedule for its implementation until its start-up. Any non performance of
the schedule results in termination of the concession and execution of the letter of guaranty.

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Ministerio de Energía y Minas / Ministry of Energy and Mines

www.minem.gob.pe

The schedule may be modified in case of force
majeure qualified by the relevant authority
which grants the concession. This applicable to:
1. Electricity generation using hydraulic resources with an installed power over 500 KW.
This concession is called Final Generation
Concession.
2. Electricity transmission when the facilities
affect state properties and/or require the
creation of easements by the State. This
concession is called Final Transmission Concession.
3. Electricity distribution as Electricity Public
Service, when the demand exceeds 500 kW.
This concession is called Final Distribution
Concession.
4. Electricity generation with renewable energy
resources according to the law with an installed power of 500 KW. This concession is
also called RER (Renewable Energy Resources)
Final Generation Concession.
Depending on the case, it requires prior
approval by the General Directorate of Energy-Related Environmental Affairs (DGAAE) on
the environmental impact assessments.
Reference rules: articles 3º, 25° and 38º of
LCE, articles 37º and 66° of its Regulation
and article 8º of Law Nº 16 053.

Authorizations
An authorization is required to perform
thermal power generation activities when the
installed power exceeds 500 kW.
In case of thermal power generation with
biomass resources, the requirements set forth
for authorizations must be met. However, the
proceeding is considered as a RER Final Generation Concession (Art. 38º LCE).
In case of projects, this authorization establishes a schedule of execution until commissioning
which non performance prevents the cancellation
of authorization and execution of the guaranty
in case of non performance. The schedule may
be modified only in case of force majeure qualified by the authority granting the authorization.
Reference rules: articles 4° and 38° of the LCE,
article 66º of its Regulations and article 8º of the
Law 16 053.
Informants
It is a category applied to small plants or units
that, in the aggregate, total less than 500 KW.
The owners and operators of these facilities must
report to the relevant authority the technical data
of their installation and operation.
Easements

According to the article 110° of the LCE, easements for occupation of public and private
properties will be created provided that they
comply with this law. The easements may be:
1. Aqueducts, dams and hydroelectric works.
2. Electrical lines for transformation substations,
transmission lines and distribution.
3. Occupation of properties which are essential
for the installation of distribution substations
for Electricity Public Service and for the development of generation activity with Renewable
Energy Resources.

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Ministerio de Energía y Minas / Ministry of Energy and Mines

www.minem.gob.pe

4. Telecommunication Systems.
5. Pass to build Access roads.
6. Transit for custody, conservation and repair of
works and installations.
Other applicable rules: articles 110º and 111º of
LCE, article 222º of its Regulations and article 8º
of Law Nº 16 053.
Other related rules regarding procedures related
to electric rights such as:

• Law Nº 27 444: Law of General Administrative Procedure.
• Law Nº 28 858: Law that supplements Law
No. 16053, which authorizes the Association
of Professional Engineers of Peru to supervise
the work of engineers in the country.

Authority to Grant Rights
The authority to grant electricity-related rights
is shared by the Central Government and the
Regional Governments. In case of Central Government, it is the Ministry of Energy and Mines
through the Electrical Concession Directorate of
the Electricity General Directorate. The authority
of the Regional Governments is specified in the
following rules:

Servicio Público de Electricidad
Public Electricity Service
Máxima demanda no mayor a 30 MW
Maximum Demand not over 30 MW
Dentro del ámbito regional
Within a region limits

• Supreme Decree Nº068-2006-PCM (13.10.2006)
Regional Governments have the authority to
grant distribution concessions with a demand
not higher than 30 MW for electricity public
service, provided that they are within the scope
of each region.
• Supreme Decree Nº053-2009-EM (11.07.2009)
The regions have the authority to grant an authorization for electricity generation –including RER
final generation concessions- with an installed
power higher than 500 kW and lower than 10
MW, provided that they are within the territory of
each region.

Geothermal Energy Specific Rules
In case of geothermal power, there are specific
rules for its exploration and development such as
the Organic Law of Geothermal Resources (LORG),
Law No. 26848, and its Regulations (RLORG),
Supreme Decree No. 019-2010-EM. During 2011,
authorizations were granted for exploration of
geothermal resources in order to start studies on
potential geothermal power projects for electricity
generation.
The major rights are:
Authorizations
According to the article 13° of LORG, an
authorization is required to carry out, on an exclusive basis, exploration activities in a given area of
geothermal resources in order to look for evidence
of geothermal resources.
Other reference rules: articles 3° and 12° of
RLORG; article 8° of Law Nº 16 053.
Exploration is the geothermal activity oriented to
determine the size, position, characteristics and
volume of geothermal studies that may be found
in the area. This authorization is made up by two
phases:
Phase I - For performing studies prior to deep
exploratory well drilling; the depth should not be
shorter than 1000 m.
Phase II - For drilling deep exploration wells, with
a minimum drilling of 03 wells.
This authorization has a total term of 03 years to
comply with Phases I (maximum two years) and
II (maximum one year), with the possibility of expansion to 02 years compared to the total term
for the causes indicated in the rule.
See articles º7 and 18º of LORG.
Concessions
According to the article 13° of the LORG, a concession of geothermal resources is required to

develop geothermal resources with exclusive
rights in all or part of the area where the geothermal resources are.
Other reference rules: articles 3º and 16º of the
LORG, articles 3º, 8º and 21º of LORG and article
8º of Law Nº 16 053.
Easements
Regarding easements, according to article 31º of
RLORG, before starting Phase II of a geothermal
exploration or the activities related to a geothermal development, agreements must be executed
with the owners of the land lots to be affected by
the geothermal activity. Otherwise, an easement
may be requested.
A concessionaire must report the National Superintendence of State Properties (Superintendencia
Nacional de Bienes Estatales) about any uncultivated land to be used to carry out geothermal
activity.
Specific Cases in Rural Electrification
According to the article 28º of the Regulations of
the General Law of Rural Electrification (RLGER),
Rural Electrical Systems (SER) will require a Final
concession for Rural Electrification to carry out the
following activities:
1. Electricity generation in distribution networks
using renewable and non renewable resources.
2. Electricity transmission, when the installations
affect State-owned properties and/or require
the creation of an easement by the State.
3. Electricity distribution as Electricity Public
Service.
It is important to mention that rural systems
must be previously registered as part of the
Rural Electrification System to request this
concession following the procedure set under
the rule (Director’s Ruling Nº 090-2011-EM/
DGE).
Likewise, regarding rural easements, according to
the article 41° of RLGER, easements required for

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Ministerio de Energía y Minas / Ministry of Energy and Mines

www.minem.gob.pe

SER are of public use and of public interest and
must be created by the Electricity General Directorate.
Other reference rules are: article 17º of the General
Law of Rural Electrification (LGER) Nº. 28 749,
article 43º of its Regulations (RLGER), D.S. Nº 0252007-EM and article 8º of the Law 16 053, R.D. Nº
090-2011-EM/DGE.

Specific laws: Environmental Law for Electricity and
its regulations (DS Nº 029-94, Jun 2008), and Law
of Rural Electrification and its regulations (DS 0112009-EM y DS 025-2007-EM, Law Nº 28 749).

The State is aware that energy production,
transport and consumption results in significant environmental impacts. In consequence,
it faces the challenge to achieve a sustainable
development of the energy system, matching
the supply of the increasing energy demand
with an effective environmental protection.
This involves moving forward inter-generation
equity in order to ensure the right of future
generations to live in a healthy and contamination-free environment and at the same time
does not restrict their hope to enjoy better
living standards and provide for a better development of current generations in our country.
Accordingly, general rules will be applicable
to any investment project such as the Law for
the National System of Environmental Impact
Assessment (SEIA), Law No. 27448 and its regulations set forth in DS 019-2009 MINAM.
The SEIA is a single and coordinated system
for the identification, prevention, supervision, control and early correction of adverse
environmental impacts resulting from human
actions expressed through investment projects.
Furthermore, according to the above mentioned law, the MINAM in coordination with the
relevant authorities may review and indicate
the list of investment projects subject to SEIA.
The first update of this list was included in RM
Nº 157-2011-MINAM.
In the electricity sector, it is applicable to:

Allowable Limits
Rules setting the allowable limits to protect environment are also applicable to the following
electricity-related activities:
• R D 008-97-EM/DGAA on the maximum
allowable limits for liquid effluents resulting
from electricity activities.
• DS 002-2008 on national environmental quality
standards for water.
• DS 003-2008 on national quality standards of
air environmental quality.
Citizen Participation
Another important rule promoting sustainability in the electricity sector is Citizen Participation,
according to RM. 223-2010-MEM/DM for the
development of consultation procedures and
mechanisms for Citizen Participation applicable
during the proceedings related to the granting
of electricity-related rights, during the preparation and evaluation of environmental studies
and during the follow-up and control of environmental aspects of electrical energy projects and
activities according to the ILO Convention Nº 169,
related to Indigenous and Tribal Peoples in Inde-

pendent Countries, Decree Law Nº 25844, and
other electricity and environmental laws.
Environmental Policy
Environmental policy takes into consideration the
following social and environmental guidelines:
• Respect for social and environmental legislation: a) Environmental Impact Assessment and
Social participation. b) Environmental Standards
according to the Peruvian legislation and the
World Bank. b) Monitoring.
• Regarding communities, related to their uses,
traditions, beliefs, languages, food, religion,
festivities, dances and clothes include actions
such as a) Participation Processes of dialogue
and consultation. b) Local jobs.
• Respect for property and application of compensations, easements and acquisitions.
• Recognition of high sensitivity: a) Monitoring
of biodiversity. b) Environmental Management
System. c) Community Relations Plan.
• Prior Consultation
In order to reinforce the relationships with the
community, Law Nº 29 785 was enacted in order
to reduce the risk of conflicts caused by development of electricity projects.
This Law was published on September 07, 2011
and its effective date is 90 days upon publication.

* Rural Electrification Projects may be evaluated by the National Government, when the project covers 02 or more regions,
or by the Regional Government, when the project is developed within a region.

Hydropower Projects
As of August 1, 2012, there were 15 final concessions in hydropower projects,
which totals 2 343,5 MW of power and US $ 4 202 millions of investment.
The holders of each concession have contract commitments with the State for
the implementation of the projects and their commissioning.
RER Projects

As of August 2012, there were 19 RER generation final concessions which total
438,1 MW. They were made up by 12 hydropower plants (210,5 MW), 02 wind
projects (110 MW) and 05 solar projects (117,5 MW).
The holders of each concession have contract commitments with the State for
the implementation of the project and their commissioning.

(4) Con solicitud de modificación de contrato de concesión, debido a prórroga de puesta en operación.
In the process of request for an amendment to concession agreement due to extension of commissioning.

b. Temporary Concessions
Hydropower Projects
As of August 2012, there were 14 temporary
concessions for performing hydropower generation projects. The aggregate of the power of
these projects amounts to 2 267,3 MW.
Wind Energy Projects

As of August 2012, there were 04 temporary
concessions for carrying out wind generation
projects. The aggregate power of these projects
amounts to 644 MW.
Solar Energy Project
In the MINEM there is one, 100 MW temporary
concession.

(1) Fecha de acuerdo con la publicación de la Resolución Ministerial.
Date of agreement with the publication of the ministry ruling.
(2) En trámite de modificación de concesión.
In the process of amendment of the concession.

(1) Según cronograma de ejecución de obras.
According to the schedule for the execution of works.
(2) En trámite solicitud de prórroga de fecha de ejecución de obras.
In process of request for extension of the date of execution of works.

Geothermal Authorization
As of August 1, 2012, there were 20 authorizations granted for the exploration of geothermal
resource in order to start studies on possible
geothermal projects for electricity generation.

Second Auction
In the first call, on August 23, 2011, 07 hydropower
projects (102 MW), 01 photovoltaic solar project (16
MW), 01 wind project (90 MW) and 01 urban waste
biomass project (2 MW) were awarded. In the aggregate, a total of 210 MW and 1 153 GW.h/year
from renewable sources were awarded.
In brief, both auctions awarded contracts to 25
RER hydropower projects totaling 282 MW and
1764 GW.h/year. In the group of wind projects
(04), solar projects (05) and biomass (03), the aggregate was 357 MW and 2 360 GW.h/year.
As of August 2012, there were projects for 18
RER hydropower plants with a total of 234 MW
and 1 500 GW.h/year. Regarding other technologies, after the start-up of the Paramonga and
Huaycoloro Cogeneration biomass plants, the
total volume was 330 MW and 1217 GW.h/year.
If a five-year forecast were made of the energy
awarded to the group of wind, solar and biomass
projects, its share in the estimated energy demand
from SEIN in the intermediate scenario would
result in a maximum of 5% until 2013 and then it
would decrease to 4% until 2015. In other words,
the RER goal of 5% would be complied until
2013 in an intermediate scenario of the estimated
demand.

On October 12, 2010, through an electricity supply auction called by the
State to promote the construction of large hydropower plants, Empresa
de Generación Eléctrica Cheves S.A. (SN Power) was awarded a supply
contract to cover 109 MW of the demand of the regulated market (electricity public service) as from July 2014 for a period of 15 years.
The electricity will be produced with its C.H. Cheves Project at 168 MW.
The tender was organized by PROINVERSIÓN. Cheves was the only
bidder out of the 09 which pre-qualified for the bidding. It submitted its
technical and economic offer for the awarding of concessions of up to
500 MW in supply contracts.
On March 24, 2011, PROINVERSIÓN awarded the bidding to the companies Huallaga, EgeCusco and Luz del Sur for the supply of electrical
energy to the National Interconnected Electric System (SEIN).

Upon request of MINEM, PROINVERSIÓN is conducting the bidding for the
Thermal Power Project for Generation Cold Reserve in Pucallpa and Puerto
Maldonado, with a joint power from 50 to 58 MW.
For further information on the bidding, visit www.proinversion.gob.pe
g. Projects without Final Concession Granted

There is an opportunity to invest in projects under a temporary concession,
because they are mainly made to perform studies.
In case of hydropower plants, there are previous studies at a national level,
such as the Preliminary Evaluation of Hydropower Potential -HIDROGIS
(Projects under 100 MW) and the Evaluation of the National Hydropower
Potential (EPHN).
As far as other energy resources are concerned, the maps of wind and solar
power potential may give important references of the location of potential generation projects, without considering discriminating protected areas
and the areas with final concession of electricity plants under construction
or existing.

La convocatoria se realizó el 05 de junio de 2012 y
las Bases del Concurso se publicaron en la página
Web de PROINVERSIÓN
The call was made on June 05, 2012 and the
Bidding Conditions were published on PROINVERSION website

8. Portfolio of Transmission Projects
a. Projects of the Proposed
Transmission Plan
According to the first plan, the projects developed under the Temporary Transmission Plan
allow for the operation of the power system in
accordance with the law until year 2013.
The list below shows the projects already
accepted that will be executed from January 01,
2013 to December 31, 2014:

In the proposed 2013-2022 Transmission Plan,
several projects already accepted were considered for an increase of capacity or changes of
927 km 220 kV transmission lines that require an
estimated investment of US $3,6 millions.
The following table shows these projects.
The proposed Transmission Plan will become
effective in January 2013. Regarding projects not
accepted yet, they will be reviewed in the studies
for the following transmission plans.

In April 2012, new 220 kV and 500 kV transmission lines and related substations
are being developed. In the aggregate, they account for a length of 1 015 km, and
US $441 millions of investment. These projects are part of the Temporary Transmission Plan and they are the result of different bidding processes.
Projects for Expansion of Existing Agreements

The MINEM, upon agreement with the transmission companies that have operation networks, prepared addenda to the existing agreements in order to upgrade
and expand projects for the transmission system.
As of April 2012, the committed investment reached US $74,5 millions (not including IGV).
The companies that will carry out these investments are Red de Energía del Perú
S.A. (US $87 millions) and ISA Perú S.A.

(1) The solution originally proposed was amended and approved in the preliminary engineering project submitted by REP. The amended budget was included in the amounts considered in the preliminary project.
(2) Official Letter No. 1066-2011-MEM/DGE dated 08/12/2011 was sent to REP, approving the extension for 75 days. REP was requested to issue the draft of the addenda.
(3) An Official Letter No. 961-2011-MEM/DGE dated 07/25/2011 was sent, annulling the expansion of the Chiclayo Oeste - Guadalupe - Trujillo Norte 220 kV LT capacity because the amendment proposed by REP exceeded the original budget.
(4) On 04/ 17/2011 a power transformer was temporarily installed in S.E Guadalupe. The installation was performed within the schedule (04/20/2011).

Fecha de
suscripción
contrato de
concesión
Date of
execution of
concession
agreement

Plazo de
Ejecución
(meses)
Term of
Execution
(months)

Contractual
Contract

Con
Amplicación
de Plazos
With
extended
term

22/08/2008

30

22/02/2011

22/08/2012

22/08/2008

30

22/02/2011

22/08/2012

Situación
Situation

En Arbitraje
In Arbitration

Monto de
Inversión
Adjudicado
Investment
amount awarded
(US$) (b)

Ubicación
Location
Cusco, Apurímac

181 011 605,0

Huancavelica,
Ayacucho, Arequipa

(a) Potencia en MW
Power in MW
(b) Los montos de Inversión no incuyen IGV
The investment amounts do not include IGV
Líneas en Proceso de Licitación a cargo de PROINVERSIÓN / Lines in process of Bidding by PROINVERSIÓN

(a) Además se ha previsto un tramo de línea de 138 kV de 1,9 km para enlazar la línea con la S.E. Quencoro.
Additionally, a section of the 138 kV line of 1,9 km is planned to link the line with S.E. Quencoro.
(b) Se tiene prevista una línea en simple terna de Machu Picchu hasta Onocora y de doble terna desde Onocora a Tintaya.
A single phase line is estimated from Machu Picchu to Onocora and double phase line from Onocora to Tintaya.
(c) Según información publicada por PROINVERSIÓN.
According to information published by PROINVERSIÓN.
(d) Los montos de inversión no incluyen el IGV.
The investment amounts do not include IGV.

The Electricity General Directorate (DGE) is the technical governing body
responsible for proposing and evaluating the policy of the Electricity
Subsector, promotes the development of electrical energy generation,
transmission and distribution , as well as contributes with the role of
granting concessions on behalf of the State for a sustainable development of electricity activities.